Answered: Refer to Figure 3. Assume a…

Refer to Figure 3. Assume a monopolistic competitive environment: From the 4 graphs depicted, which one represents a firm earning zero economic profits? a. b. C. d. panel a panel b panel c panel d

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Price
Price
@
(c)
MA
MC
MR
ATC
Quantity
MC
ATC
D
Quantity
Price
Price
(b)
MR
6
MC
D
Quantity
MC
ATC
ATC
D
Quantity
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110

Refer to Figure 3. Assume a monopolistic competitive environment: From the 4 graphs depicted, which one represents a firm
earning zero economic profits?
panel a
panel b
panel c
panel d
a.
b.
C.
d.
a

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The following graph characterizes a firm in a monopolistically competitive market. 32 24 18 16 12 8- ATC This show that the firm is 12 MC earing zero economic profits. producing 16 units of the good. in a long run equilibrium. in a short run position. MR 16 20 24 Demand 28 32 Q
Q. 2
WataDine is one of a city’s many restaurants that serve lunch and dinner in a monopolistically competitive market. Assume WataDine, as a typical restaurant in the city, is currently producing the profit-maximizing output level, and earns positive short-run economic profit. (a) How is monopolistic competition similar to each of the following market structures? (i) Perfect competition (ii) Monopoly (b) WataDine is currently earning short-run economic profits. Draw a correctly labeled graph for WataDine in short-run equilibrium and show each of the following. (i) The profit-maximizing quantity, labeled QM (ii) The profit-maximizing price, labeled PM (c) Given that WataDine is currently earning short-run economic profits, what will happen to each of the following in the long run? (i) WataDine's economic profit. Explain. (ii) WataDine's demand curve for its restaurant meals. (d) Assume WataDine is in long-run equilibrium. (i) Is WataDine taking advantage of its economies of scale? Explain.…
Q.3 Briefly answer the following questions with the help of examples where necessary: a. Can a monopolist set the price whatever it wants to? b. Why does a perfectly competitive firm cannot control the price? c. How perfectly competitive firm is different from monopolistic competitive firm? d. Give 2 examples of product that approximates oligopoly in Pakistan?
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